Rights of Shareholders

All stockholders have the right to vote on the election, removal and replacement of Directors and vote on certain corporate acts in accordance with the Corporation Code.

Cumulative voting shall be used in the election of Directors. Directors may be removed with or without cause, but Directors shall not be removed without cause if it will deny minority shareholders representation in the Board. Removal of Directors requires an affirmative vote of two-thirds (2/3) of the outstanding capital of the Corporation.

Any stockholder my nominate candidates for election to the Board of Directors by sending a nomination letter to the Corporate Governance and Nomination Committee within the relevant deadline as may be approved by the Board and disclosed pursuant to the rules of the PSE. All nominations will be reviewed and deliberated upon by the Corporate Governance and Nomination Committee prior to indorsing the qualified candidates for ratification and approval by the Board.

No stockholder of any class shall be entitled to any pre-emptive right to purchase, subscribe for, or receive any part of the shares of the Corporation, whether issues from its unissued capital, increase in its authorized capital or its treasury stock.

Shareholders are allowed to inspect corporate books and records including minutes of Board meeting and stock registries in accordance with the Revised Corporation Code and shall be provided an annual report, including financial statements, without cost or restrictions.

The Shareholders shall be provided, upon request, with periodic reports which disclose personal and professional information about the Directors and officers and certain other matters such as their holdings of the Corporation’s shares, dealings with the Corporation, relationships among Directors and key officers, and the aggregate compensation of Directors and officers.

The Information Statement/Proxy Statement where these are stated must be distributed to the shareholders before annual general meetings and in the Registration Statement and Prospectus in case of registration of shares for public offering with the Commission.

The minority shareholders shall have the right to propose the holding of a meeting, and the right to propose items in the agenda of the meeting, subject to reasonable advance notice and guidelines issued by the Board which are consistent with applicable laws, rules and regulations of the SEC.

In accordance with existing laws and jurisprudence, minority shareholders shall have access to any and all information relating to matters for which the Management is accountable for and to those relating to matters for which the Management should include such information and, if not included, then the minority shareholders can propose to include such matters in the agenda of stockholders’ meeting provided always that this right of access is conditioned upon the requesting shareholder’s having a legitimate purpose for such access.

The Board shall make the results of the votes taken during the most recent Annual or Special Shareholders’ Meeting publicly available the next working day. In addition, the minutes of Annual and Special Shareholders’ Meeting should be available on the Corporation’s website within five (5) business days from the end of the meeting.

Shareholders have the right to receive dividends out of the Corporation’s unrestricted retained earnings subject to the discretion of the Board. The Corporation shall distribute annually at least ninety percent (90%) of its distributable income as dividends to its shareholders not later than the last day of the fifth (5^th) month following the close of the fiscal year of the Corporation in accordance with the REIT Law. However, the Corporation, by at least majority of the Board, including the unanimous vote of all independent directors, may restrict the retained earnings and not distribute the same: a) when justified by definite corporate expansion projects or programs approved by the Board or b) when the Corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its consent, and such consent has not been secured; or c) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the Corporation, such as when there is a need for special resere for probable contingencies.

In accordance with the Revised Corporation Code, shareholders may exercise appraisal rights under the following circumstances:

1. In case an amendment to the Articles of Incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;
2. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Revised Corporation Code;
3. In case of merger or consolidation; and
4. In case of investment of corporate funds for any purpose other than the primary purpose of the Corporation.

Any dispute, controversy or claim between the Corporation and its stockholders arising from, relating to, or in connection with the Implementation of the Articles of Incorporation or By-Laws, or from intra-corporate relations, except those involving criminal offenses and interests of third parties, may be referred to and resolved by arbitration in accordance with prevailing Philippine Dispute Resolution Center, Inc. (PDRCI) Arbitration Rules and Securities and Exchange Commission Rules and Regulations.

It is the duty of the Directors to promote shareholders’ rights, remove impediments to the exercise of shareholders’ rights and recognize lawful mechanisms to seek redress for violation of their rights. They shall encourage the exercise of shareholders’ voting rights and the solution of collective action problems through appropriate mechanisms.

They shall be instrumental in removing excessive costs and other administrative or practical impediments to shareholders participating in meetings and/or voting in person. The Directors shall pave the way for the electronic filing and distribution of shareholder information necessary to make informed decisions subject to legal constraints.

The Notice of the Annual Stockholders’ Meeting (ASM) and the Definitive information Statement (DIS) are sent to stockholders at least 28 days before the meeting date.

The notice is in English, and contains the agenda, rationale, and explanation for each item that requires stockholders’ approval. Each resolution taken up in the ASM deals with only one agenda item. The results of the preliminary tabulation of votes for each resolution are reported by the Corporate Secretary during the meeting and the results of the final tabulation of votes are reflected in the minutes of the meeting.

The DIS contains the profile and personal data of all the directors, including those up for election or re-election, and of the auditors recommended for election. In 2023, the principal accountant and external auditor of the company, Isla Lipana, was recommended for re-election at the ASM.

The DIS also indicates and explains the dividend policy and the total amount payable.

The Related Party Transactions Policy requires that all related party transactions between AREIT, Inc., its subsidiaries, affiliates, and other related entities or persons are conducted on an arm’s length basis, at normal prices, and will inure to the best interest of the Corporation, and not prejudice the minority shareholders and the government.

To ensure that this policy is practiced in strict compliance, an assessment is undertaken of related party transactions as they happen.